FUNDAMENTAL ANALYSISFUNDAMENTAL ANALYSIS

FUNDAMENTAL ANALYSISFUNDAMENTAL ANALYSIS

ECONOMY ANALYSISECONOMY ANALYSIS

INDUSTRY ANALYSISINDUSTRY ANALYSIS

COMPANY ANALYSISCOMPANY ANALYSIS

COUNTRY ANALYSISCOUNTRY ANALYSIS

The Indian economy grew at 9.6 per cent in The Indian economy grew at 9.6 per cent in 2006-07 and 9 per cent in 2007-08, 2006-07 and 9 per cent in 2007-08, emerging as the second fastest growing emerging as the second fastest growing major economy in the world major economy in the world

Foreign Exchange Reserves

$247.76 309.72

FII 10.310.3 16.1

FDI 15.7 24.57

2006-07 2007-08

GDPGDP

GDP

3.84

8.527.45

9.42 9.69.03

0

2

4

6

8

10

12

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Year

Gro

wth

%

GDP

INVESTMENT IN FIXED INVESTMENT IN FIXED ASSETS % OF GDPASSETS % OF GDP

Investment (GDP %)

23.1 23.8

28.1 29.231.8

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008

INFLATIONINFLATION

% of change

4.3 3.8 3.8 4.45.5 5.4

12.64

0

2

4

6

8

10

12

14

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

year

infla

tion

rate

% of change

Industrial Production Industrial Production Industrial production growth rate

6.00%6.50%

7.40% 7.90% 7.50%

10.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2003 2004 2005 2006 2007 2008

YEAR

GRO

WTH

%

annual percentage increase in industrial production (includes manufacturing, mining, and construction).

POSITION OF INDIAPOSITION OF INDIA

Rank CountryGDP (purchasing power parity) (Billion

$)

1 United States 13,860                                                     

2 China 7,043                           

3 Japan 4,417                 

4 India 2,965            

5 Germany 2,833           

6 United Kingdom 2,147         

7 Russia 2,076        

8 France 2,067        

9 Brazil 1,838       

10 Italy 1,800       

FUTURE OF INDIAN FUTURE OF INDIAN ECONOMYECONOMY

Over 300 million Indians are expected to have a Over 300 million Indians are expected to have a household income of over US$ 6,000 by 2015.household income of over US$ 6,000 by 2015.

India is among the world's youngest nations with India is among the world's youngest nations with a median age of 25 yearsa median age of 25 years

India has the second largest area of arable land India has the second largest area of arable land

in the world, making it one of the world's largest in the world, making it one of the world's largest food producers - over 200 million tonnes of food producers - over 200 million tonnes of foodgrains are produced annually.foodgrains are produced annually.

With the largest number of listed companies - With the largest number of listed companies -

10,000 across 23 stock exchanges, 10,000 across 23 stock exchanges,

FUTURE OF INDIAN FUTURE OF INDIAN ECONOMYECONOMY

India's healthy banking system with a India's healthy banking system with a network of 70,000 branches is among the network of 70,000 branches is among the largest in the world largest in the world

According to a study by the McKinsey According to a study by the McKinsey Global Institute (MGI), India's consumer Global Institute (MGI), India's consumer market will be the world's fifth largest market will be the world's fifth largest (from twelfth) in the world by 2025 (from twelfth) in the world by 2025

India's middle class will swell by over ten India's middle class will swell by over ten times from its current size of 50 million times from its current size of 50 million to 583 million people by 2025to 583 million people by 2025

The number of companies incorporated The number of companies incorporated

has increased at an annual average of has increased at an annual average of 55,000 companies in the last two years 55,000 companies in the last two years

INDUSTRY ANALYSISINDUSTRY ANALYSIS

CEMENT INDUSTRYCEMENT INDUSTRY

CEMENT INDUSTRYCEMENT INDUSTRY India is the world’s second largest India is the world’s second largest

producer of cement after China producer of cement after China with industry capacity of over 200 with industry capacity of over 200 million tonnes (MT) million tonnes (MT)

Total installed capacity was Total installed capacity was 204.29 MT as on August 31, 2008204.29 MT as on August 31, 2008

Total despatches has been 100.17 Total despatches has been 100.17 MT during April–October 2008–09 MT during April–October 2008–09

100.96 MT during April–October 100.96 MT during April–October 2008–09. 2008–09.

CEMENT INDUSTRY CEMENT INDUSTRY ANALYSISANALYSIS

India’s cement consumption India’s cement consumption grew 9.6% yoy.grew 9.6% yoy.

South market witnessed South market witnessed strong demand supporting strong demand supporting firm pricing (up 4.7% yoy) in firm pricing (up 4.7% yoy) in the region.the region.

The key concern dip in The key concern dip in construction and construction and infrastructure activities in infrastructure activities in the country.the country.

CEMENT INDUSTRY CEMENT INDUSTRY ANALYSISANALYSIS

Rebound in consumption growth; Rebound in consumption growth; Central and South region Central and South region outperform.outperform.

RegionRegion GrowthGrowth%%

IndiaIndia

SouthSouth

WestWest

CentralCentral

NorthNorth

EastEast

9.69.6

16.316.3

9.89.8

14.314.3

3.73.7

2.12.1

CEMENT INDUSTRY CEMENT INDUSTRY ANALYSISANALYSIS

Contradictory pricing trend Contradictory pricing trend emerge; realizations remained emerge; realizations remained robust in Southrobust in South

Capacity utilization improves MoM Capacity utilization improves MoM but remains lower yoybut remains lower yoy

Key performers were players who Key performers were players who have recently added capacitieshave recently added capacities

Coal prices cool from peak; freight Coal prices cool from peak; freight index fell to the lowest levels since index fell to the lowest levels since 2002.2002.

Consumption Growth & Consumption Growth & Capacity AdditionCapacity Addition

Consumption in Million Tonnes and Consumption in Million Tonnes and Capacity addition in Million Tonnes p aCapacity addition in Million Tonnes p a

RegionRegion ConsumptionConsumption Capacity Capacity AdditionAdditionSep 08Sep 08 Sep 07Sep 07 Aug Aug

0808

SouthSouth 4.434.43 3.83.8 4.494.49 27.627.6

NorthNorth 2.852.85 2.752.75 2.412.41 15.015.0

WestWest 2.42.4 2.352.35 2.42.4 11.311.3

EastEast 1.911.91 1.741.74 1.861.86 7.57.5

Mergers and Mergers and AcquistionsAcquistions

The cement sector contributing to 7 per The cement sector contributing to 7 per cent to the total deal valuecent to the total deal value

Holcim strengthened its position in India Holcim strengthened its position in India by increasing its holding in Ambuja by increasing its holding in Ambuja Cement from 22 per cent to 56 per cent. Cement from 22 per cent to 56 per cent.

Leading foreign funds have together Leading foreign funds have together bought around 7.5 per cent in India’s bought around 7.5 per cent in India’s third-largest cement firm, India Cements third-largest cement firm, India Cements (ICL), for US$ 124.91 million(ICL), for US$ 124.91 million

Cimpor, the Portugese cement maker, Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim paid US$ 68.10 million for Grasim Industries’ 53.63 per cent stake in Shree Industries’ 53.63 per cent stake in Shree Digvijay CementDigvijay Cement

Cement IndustryCement Industry

Entry barriers:Entry barriers:

Economies of scaleEconomies of scale Capital requirementCapital requirement Avg gestation period of 2-3 yearsAvg gestation period of 2-3 years Access to distribution channelsAccess to distribution channels Threat of new entrants: lowThreat of new entrants: low

Bargaining power of suppliersBargaining power of suppliers: High: High Large and few sellersLarge and few sellers No substitutesNo substitutes Sellers’ product important input for buyerSellers’ product important input for buyer

Cement IndustryCement Industry

Bargaining power of buyers: low/mediumBargaining power of buyers: low/medium Standard productStandard product No substituteNo substitute

Intensity of competition: MediumIntensity of competition: Medium Equally balanced competitorsEqually balanced competitors Average industry growthAverage industry growth High fixed costsHigh fixed costs Lack of switching costLack of switching cost Capacity augmentation in large incrementsCapacity augmentation in large increments High exit barriersHigh exit barriers

Substitutes: NoneSubstitutes: None

SWOTSWOT

STRENGTHSSTRENGTHS Second largest in the world in Second largest in the world in

terms of capacityterms of capacity Low cost of productionLow cost of production

SWOTSWOT

WEAKNESSWEAKNESS

Effect of global recession on Effect of global recession on Real Estate and Infrastructure.Real Estate and Infrastructure.

Demand-Supply gap, OvercapacityDemand-Supply gap, Overcapacity Increasing Cost of ProductionIncreasing Cost of Production High Interest ratesHigh Interest rates

SWOTSWOT

OPPORTUNITIESOPPORTUNITIES Strong growth of economy in Strong growth of economy in

the long run.the long run. Increase in infrastructure Increase in infrastructure

projectsprojects Growing middle classGrowing middle class Technological ChangesTechnological Changes Increase in govt spending.Increase in govt spending.

SWOTSWOT

THREATSTHREATS

Imports from Pakistan Imports from Pakistan affecting markets in Northern affecting markets in Northern India.India.

Excess over capacity can hurt Excess over capacity can hurt margins as well as pricesmargins as well as prices..

CHALLENGESCHALLENGES

Cement industry currently Cement industry currently has one of the highest has one of the highest inventory levels in recent inventory levels in recent times.times.

Growth rates have slowed.Growth rates have slowed. Capacity additions putting Capacity additions putting

pressure on prices.pressure on prices. As a result the cement As a result the cement

companies are looking for companies are looking for cutting productioncutting production

COMPANY COMPANY ANALYSISANALYSIS

Cement House 121, Maharishi Karve Road

Mumbai - 400 020India

Tel: 91-22-66654321Fax: 91-22-66317440

Corporate officeCorporate office

Established in 1936, ACC has been a pioneer Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete and trend-setter in cement and concrete technology. technology.

ACC's operations are spread throughout the ACC's operations are spread throughout the country with 14 modern cement factories, more country with 14 modern cement factories, more than 30 Ready mix concrete plants, 20 sales than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices. offices, and several zonal offices.

It has a workforce of about 10,000 persons and It has a workforce of about 10,000 persons and a countrywide distribution network of over a countrywide distribution network of over 9,000 dealers.9,000 dealers.

It is the only cement company that figures in It is the only cement company that figures in

the list of Consumer SuperBrands of Indiathe list of Consumer SuperBrands of India Ten existing cement companies came together Ten existing cement companies came together

under one umbrella in a historic merge under one umbrella in a historic merge

OverviewOverview

F. E. Dinshaw – the founder of ACCF. E. Dinshaw – the founder of ACC

ACC's First Board Meeting in 1936 at The Esplanade

BOARD OF DIRECTORS BOARD OF DIRECTORS

Mr N. S. SekhsariaMr N. S. SekhsariaChairman  Chairman 

Mr Paul HugentoblerMr Paul Hugentobler Deputy Chairman Deputy Chairman

Mr Sumit BanerjeeMr Sumit BanerjeeManaging Director Managing Director

Mr S M PaliaMr S M PaliaMr Naresh ChandraMr Naresh Chandra

Mr Markus AkermannMr Markus AkermannMr M L Narula Mr M L Narula

Mr D K MehrotraMr D K MehrotraMr R A ShahMr R A Shah

Dr Nirmalya KumarDr Nirmalya KumarMr Shailesh Haribhakti Mr Shailesh Haribhakti

Ms Shikha Sharma Ms Shikha Sharma

Units Units CapacityCapacity (MTPA) (MTPA)

Bargarh Bargarh 0.960.96

ChaibasaChaibasa 0.870.87

Chanda Chanda 1.001.00

DamodharDamodhar 0.530.53

Gagal Gagal 4.404.40

Jamul Jamul 1.581.58

Kymore Kymore 2.202.20

Lakheri Lakheri 1.501.50

Madukkarai Madukkarai 0.96 0.96

Sindri Sindri 0.910.91

Wadi Wadi 2.592.59

New Wadi Plant New Wadi Plant 2.602.60

Tikaria Tikaria 2.312.31

TotalTotal 22.4122.41

Plant wise capacity Plant wise capacity

SubsidiariesSubsidiaries

Bulk Cement Corporation Bulk Cement Corporation (India) Ltd. (BCCI)(India) Ltd. (BCCI)

ACC Concrete Limited ACC Concrete Limited Lucky Minmat Lucky Minmat

Products & ServicesProducts & Services

Ordinary Portland CementsOrdinary Portland Cements   OPC 43 GradeOPC 43 Grade   OPC 53 GradeOPC 53 Grade Blended Cements Blended Cements   Fly-ash based Portland Pozzolana Fly-ash based Portland Pozzolana

CementCement   Portland Slag CementPortland Slag Cement Ready Mix ConcreteReady Mix Concrete Consultancy ServicesConsultancy Services

Financial analysisFinancial analysis

Balance sheetBalance sheet Profit & loss AccountProfit & loss Account Fund flow statementFund flow statement

   20072007 2006 2006 2005 (9M)2005 (9M) 2004-052004-05 2003-042003-04

Gross RevenueGross Revenue 79,771 79,771 65,860 65,860 38,15138,151 46,40546,405 40,38840,388

Profit After TaxProfit After Tax 14,386 14,386 12,31812,318 5,4425,442 3,7843,784 2,0022,002

DividendDividend 4,389 4,389 3,2203,220 1,6861,686 1,430 1,430 800800

Net WorthNet Worth 41,52741,527 31,42031,420 21,30021,300 15,77015,770 13,18413,184

Capital Capital Employed Employed 49,533 49,533 43,78743,787 36,07036,070 33,82033,820 30,10930,109

BorrowingsBorrowings 4,6914,691 9,1609,160 11,76211,762 15,093 15,093 13,27213,272

Debt-Equity Debt-Equity RatioRatio 0.110.11 0.290.29 0.550.55 0.960.96 1.071.07

Book Value per Book Value per Share (Rs)Share (Rs) 221.33221.33 167.77167.77 115.00115.00 88.0088.00 74.4174.41

Earning per Earning per ShareShare 76.7576.75 66.0266.02 30.0230.02 21.2321.23 11.6811.68

Dividend per Dividend per ShareShare 20.0020.00 15.0015.00 8.008.00 7.007.00 4.004.00

Employees Employees (Number)(Number) 10,03210,032 9,2319,231 9,1709,170 8,9958,995 9,1159,115

Shareholders Shareholders (Number)(Number) 1,27,4761,27,476 1,10,4551,10,455 97,21997,219 1,05,1651,05,165 1,20,8031,20,803

Financial highlightAll figures in Rs. Million or as indicated

Gross RevenueGross Revenue

YearYearGross Revenue(in Gross Revenue(in

Rs. million)Rs. million)

2001-022001-02 3333833338

2002-032002-03 3465434654

2003-042003-04 4038840388

2004-052004-05 4640546405

2005 (9M)2005 (9M) 3815138151

20062006 6594765947

20072007 7977179771

EBITDAEBITDAYearYear EBITDA(in Rs. EBITDA(in Rs.

million)million)

2001-022001-02 49234923

2002-032002-03 40364036

2003-042003-04 53395339

2004-052004-05 72007200

2005 2005 (9M)(9M)

63376337

20062006 1756117561

20072007 2046220462

PATPAT

YearYear PATPAT(in Rs. million)(in Rs. million)

2001-022001-02 13041304

2002-032002-03 10391039

2003-042003-04 20022002

2004-052004-05 37843784

2005 (9M)2005 (9M) 54425442

20062006 1231812318

20072007 1438614386

DividendsDividends

YearYear Dividends Dividends (%)(%)

2001-022001-02 3030

2002-032002-03 2525

2003-042003-04 4040

2004-052004-05 7070

2005 (9M)2005 (9M) 8080

20062006 150150

20072007 200200

Net Worth & Return on Net Worth & Return on the Net Worththe Net Worth

YearYear Net WorthNet Worth(in Rs. million)(in Rs. million) Return on Net WorthReturn on Net Worth (%) (%)

2001-022001-02 94599459 1414

2002-032002-03 1024210242 1010

2003-042003-04 1318413184 1515

2004-052004-05 1577015770 2424

2005(9M)2005(9M) 2130021300 3333

20062006 3142031420 3939

20072007 4153041530 3535

Book Value Per ShareBook Value Per Share

YearYearBook Value Per ShareBook Value Per Share(in (in

Rs.)Rs.)

2001-022001-02 5555

2002-032002-03 6060

2003-042003-04 7474

2004-052004-05 8888

2005 2005 (9M)(9M)

115115

20062006 168168

20072007 221221

EQUITY SHAREEQUITY SHARE

Company's Company's Financial Financial yearyear

   20072007 20062006 20052005 2004-052004-05 2003-042003-04

Earnings Per Earnings Per ShareShare Rs.Rs. 76.75 #76.75 # 66.02#66.02# 30.02#30.02# 21.23#21.23# 11.68#11.68#

Earning-price Earning-price RatioRatio    13.7413.74 16.4416.44 17.7417.74 17.2517.25 21.6221.62

YieldYield %% 1.901.90 1.381.38 1.501.50 1.911.91 1.581.58

Debt - EquityDebt - EquityRatioRatio    0.110.11 0.290.29 0.550.55 0.960.96 1.091.09

Current RatioCurrent Ratio    1.071.07 1.261.26 1.161.16 1.251.25 1.221.22

a) Higha) High Rs.Rs. 1,3151,315 1,1921,192 569569 385385 283283

b) Lowb) Low Rs.Rs. 680680 501501 318318 218218 127127

Key Ratios Key Ratios RatioRatio 20072007 20082008

Liquidity RatiosLiquidity Ratios

Current ratioCurrent ratio 1.581.58 1.871.87

Quick ratioQuick ratio 1.051.05 1.261.26

Leverage ratioLeverage ratio

Debt-equity ratioDebt-equity ratio 0.110.11 0.290.29

Total debt-equity Total debt-equity

0.680.68 1.001.00

Proprietary ratioProprietary ratio 0.600.60 0.530.53

Interest coverage Interest coverage ratioratio

70.7270.72 27.0327.03

Cont..Cont..

RatioRatio 20072007 20082008

Profitability ratiosProfitability ratios

Return on Return on assetsassets

20.520.5 20.8520.85

Return on Return on capital capital employedemployed

3.413.41 3.213.21

Return on Return on equityequity

0.390.39 0.340.34

EPSEPS 76.75 Rs76.75 Rs 66.02 Rs66.02 Rs

Dividend pay Dividend pay out ratioout ratio

26.31%26.31% 22.72%22.72%

shareholdingIndian Bodies Corporate

Foreign Bodies Corporate

Mutual Funds/ UTI

Financial Institutions/ Banks

Central Government/ State Government(s)

Foreign Institutional Investors

Bodies Corporate

Individuals -

i.    Individual shareholders holding nominalshare capital upto Rs. 1 lakh.

ii.  Individual shareholders

i.Shares held by Pakistani Citizens vestedw ith the Custodian of Enemy Property

iii. Foreign Bodies

iv. NRI/OCBs

v. Clearing Members/Clearing House

vi. Trusts

Shares held by Custodians and againstw hich Depository Receipts have beenissued

Shareholding PatternShareholding Pattern

Expected Dividend (TA)Expected Dividend (TA)

YEAR (X) DIVIDEND (y) x xy

2003-04 4 -2 -8

2004-05 7 -1 -7

2005 (9 M) 8 0 0

2006 15 1 15

2007 20 2 40

54 40

Time series analysisTime series analysis

A=10.8A=10.8 B=3B=3

Y=a+bXY=a+bX 2008= 10.8+3(2008-2005)2008= 10.8+3(2008-2005)

= 19.8= 19.8 2009=10.8+3(2009-2005)2009=10.8+3(2009-2005)

= 22.8= 22.8

Intrinsic valueIntrinsic value

For 2008; ROR =7.5%For 2008; ROR =7.5%

So= Div/(1+Ke)So= Div/(1+Ke)tt+MV/(1+Ke)+MV/(1+Ke)nn

= 19.8/(1.075)= 19.8/(1.075)11+ 403/(1.075)+ 403/(1.075)11

= 374.9= 374.9

Here, So<MV so Sale Is Good for investorHere, So<MV so Sale Is Good for investor

20092009

So will be 387.03So will be 387.03

AS,So<MV seller should sell at current AS,So<MV seller should sell at current levelslevels

BIBLIOGRAPYBIBLIOGRAPY

www.indexmundi/Indiawww.indexmundi/India%20Investment%20(gross%20Investment%20(gross%20fixed)%20-%20Economy.html%20fixed)%20-%20Economy.html

www.indiainfoline.comwww.indiainfoline.com www.business-standard.comwww.business-standard.com www.bseindia.comwww.bseindia.com www.moneycontrol.comwww.moneycontrol.com www.rediff/money.com/www.rediff/money.com/

myportfolio/acc/results.htmlmyportfolio/acc/results.html

BIBLIOGRAPYBIBLIOGRAPY

Portfolio Management by S.KevinPortfolio Management by S.Kevin Security Analysis and portfolio Security Analysis and portfolio

mgmt : Fischer Jordanmgmt : Fischer Jordan Capital market nov 2 editionCapital market nov 2 edition Business standard Nov 26Business standard Nov 26